Gagne v. Gagne
2014 COA 127
Colo. Ct. App.2014Background
- Paula Gagne and Richard Gagne are mother and son, sole members of four LLCs that own apartment properties; the LLCs have a disputed management structure and ownership interests.
- The LLC Agreements name Paula as Chief Executive Manager with 51% voting rights; Richard has in-kind contributions granting him equal ownership.
- Disputes center on management of properties, the right of first refusal for management, and alleged breaches by Paula (e.g., a contract with a family member and an LLC loan).
- Richard sought judicial dissolution, a declaratory judgment on rights and relationships, and a receiver; the district court granted partial summary judgment on dissolution and later custodian)served as custodian.
- The court ruled Paula must indemnify and defend the LLCs for the Jay contract and the LLC loan, but ultimately the court’s declaratory relief and fee rulings were contested on appeal.
- The appellate court remands on dissolution and on construction of paragraph 4; it vacates or reverses portions related to the Jay contract, the LLC loan, and the property-management declaration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Judicial dissolution standard applied | Richard argues dissolution should be allowed where deadlock or mismanagement, making continued operation impracticable. | Paula contends the LLCs can be operated under the agreements despite conflict and that dissolution is not warranted. | Genuine material facts preclude partial summary judgment on dissolution. |
| Effect of Meeting Minutes on paragraph 4 | Richard contends Minutes amended paragraph 4 to give HSI ongoing rights. | Paula contends Minutes have limited effect and do not amend central provisions. | Paragraph 4 ambiguous; remand to determine intent and proper effect. |
| Declaratory judgment about Jay contract and LLC loan | Richard sought declaratory relief based on breaches related to Jay contract and loan. | Paula did not seek declaratory relief on those issues; claims were not pleaded. | Declaratory relief regarding Jay contract and LLC loan reversed as never-pleaded. |
| Disgorgement of fees | Richard seeks disgorgement of attorney fees paid by LLCs defending Paula. | No improper use of LLC funds; defenses align with protecting LLC interests. | Fees were properly paid by LLCs; disgorgement denied. |
| Attorney-fee entitlement under 18-17-201 and 13-17-201 | Richard seeks fees under both statutes. | Paula argues 18-17-201 applies only to defendants; 13-17-201 does not award fees here. | 18-17-201 applied to counterclaim defendants; 13-17-201 denied; appellate fees denied. |
Key Cases Cited
- Castro v. Lints, 338 P.3d 1063 (Colo. App. 2014) (statutory interpretation of attorney-fee eligibility; predominance test for mixed tort/non-tort claims)
- Robinson v. Colo. State Lottery Div., 179 P.3d 998 (Colo. 2008) (considerations for judicial dissolution and contract remedies)
- Dinosaur Park Invs., L.L.C. v. Tello, 192 P.3d 513 (Colo. App. 2008) (pleading scope and implied-trial-consent limits on relief sought)
- In re Cat Island Club, LLC, 94 So.3d 75 (La. Ct. App. 2012) (dissolution standards for LLCs; factors weighing practicability of continuation)
- Stauffer v. Stegemann, 165 P.3d 713 (Colo. App. 2007) (application of attorney-fee statutes to mixed actions)